The number of buy-to-let landlords choosing to operate through a limited company is firmly on the rise, and they could offer cheaper rents, too.
Almost a fifth (18%) of all privately rented properties are now owned through a limited company landlord, new research by Hamptons International analysing lettings data from the first half of 2018 has revealed. This is a 4% rise compared to the first six months of 2017, and an 8% increase on 2016’s figures, proving the trend is more popular now than ever.
On a regional basis, the most “company landlords” were see in Yorkshire and the Humber, accounting for 25% of all homes let privately, while the north-west wasn’t far behind with 20% of all rental properties owned by company landlords, followed by London with 19%.
The good news for tenants
Rents being charged by such landlords were also cheaper overall, the statistics revealed, with 35% of all properties let by a company landlord bringing in less than £500 per month, compared to 19% for individual landlords. More than half (54%) of company landlord properties were being charged at £500-£1,000, with just 7% in the £1,000-£1,500 bracket compared to 11% for individuals.
One reason for this could be that some landlords stand to make tax savings by operating through a limited company structure as opposed to an individual, which has become a more prominent issue since Section 24 mortgage interest relief changes began being phased in earlier this year. It could be that these landlords are then able to pass these savings on to their tenants, rather than upping the rents to pay for any additional tax outgoings as a result of the changes.
Aneisha Beveridge, analyst at Hamptons International, said: “The number of rented homes owned by company landlords continues to rise.
“Nearly one in five homes let so far this year were owned by a company landlord, almost double the proportion in 2015, before the tapering of mortgage interest tax relief changes were announced.”
“Companies are generally taxed more favourably, so in many cases landlords can make cash savings by operating through a company rather than as an individual.”
Rental growth across the UK
In terms of rental growth across the private rented sector as a whole, the biggest upsurge was see in Wales with a 4.1% average rental increase between June 2017 and June 2018, from £644 a month to £671. This was followed by the east of England with 2.3% growth, and the Midlands with a 2.2% rise.
The only area to see its rental values fall was London, where monthly prices dropped by 0.5% in outer London from £1,496 to £1,489, and by 0.3% in inner London from £2,603 to £2,596.
